When you look back at postwar history, you see lots of examples of where the consensus of opinion overreacts to a perceived threat. Here are three examples, but there are many more that could be cited:
1. After the Soviet Union occupied Eastern Europe and developed nuclear weapons, there was a second “red scare”. (The first occurred right after WWI.) Eventually this led to an overreaction, including McCarthyism and US involvement in the Vietnam War. (Some would cite Korea as well; that’s more debatable.)
2. After the severe 1981-82 recession and deindustrialization in the Rustbelt, a consensus developed that Japan was an economic threat to the US. This led to some unfortunate protectionist policies.
3. After 9/11, a consensus developed that Saddam Hussein was a threat to the US. Many people now wrongly believe that this threat was manufactured by Bush and Cheney. Not so, support for the Iraq war crossed partly lines. For instance, had Gore won the 2000 election; he planned to make Richard Holbrooke his top foreign policy advisor. Gore’s campaign was quite hawkish, more so than Bush’s. Top Democrats tended to support the war (Clinton, Kerry, Holbrooke, and many others.) It was a product of elite opinion, crossing party lines.
Of course there are differences here. Communism and Saddam Hussein really were threats, to which we overreacted. In contrast, Japan was not a threat at all.
My question today is, “To which perceived threats are we currently overreacting?”
There are lots of possibilities, including Russia, Iran and North Korea. But the greatest over-reaction seems to be occurring to the rise in China. The threat from China is described in four different ways:
1. China as an economic threat to the US jobs market.
2. China as a threat to our technological supremacy.
3. China as a military threat, probably more to its neighbors than the mainland US.
4. China as a political threat, an alternative model to the democratic liberalism promoted by the US until 2017.
The first point is easiest to dismiss, as it’s based on bad economic theory. As Paul Krugman pointed out in “Pop Internationalism”, whenever someone says that traditional free trade theory does not apply to a particular real world case, it’s usually the case that the speaker does not understand the basic theory of comparative advantage.
The second point is harder to dismiss. In my view, there can be more than one leader in technology. For instance, China currently leads the US in areas such as 5G networks, electronic money and high-speed rail. We lead China in many more categories. Each country can learn from the other, and adopt the best technology from overseas.
On purely theoretical grounds, it might be true that China slows technological progress by stealing ideas and undermining intellectual property rights. But overall, the gains from China almost certainly outweigh the losses. Here are two examples to illustrate my point:
a. Chinese firms often pirate Microsoft Windows. This gives Bill Gates a bit less incentive to develop improved versions, compared to the situation where China does not pirate Microsoft Windows.
b. China provides an extraordinarily efficient manufacturing platform for products such as Apple iPhones.
I can’t prove this, but I suspect that the Chinese piracy of Microsoft Windows does not dramatically reduce innovation in that space; Bill Gates still learns a lot of money from markets where his products are not pirated (more than $100 billion!), and still has lots of incentive to innovate. The piracy is not nothing, but it’s also not a huge problem.
In contrast, China is a huge boon to companies such as Apple, and allows the iPhone to be far more widely adopted than if China did not exist. That dramatically boosts profit margins at Apple.
In net terms, China’s probably a plus for the US. That doesn’t mean we should not encourage them to crack down on piracy, just that the technological threat is probably overdone.
Technology also overlaps with military capability, the third perceived threat. China’s military is improving over time, but will likely never be a direct threat to the US. Rather, the fear is that a stronger China will lead to more “hegemony” over its neighborhood. Fortunately, China is not like the Soviet Union, and does not seek to create a large empire. Its foreign policy is relatively isolationist. Surprisingly, China is actually smaller than it was 100 years ago, when it was a weak country, despite being far more powerful today than in 1919:
China’s dominant ideology is, “don’t interfere in the internal affairs of other countries.” In this respect, the West is actually quite lucky. What if China were not isolationist? What if, like the US and Russia, China believed it were appropriate for great powers to overthrow governments that it did not like? In that case, we’d be far more worried about the rise of China. Isolationism has pluses and minuses, but when the great power is not a liberal democracy, we should actually be relieved that it has an isolationist ideology.
That doesn’t mean that China has no involvement in the rest of the world; they sometimes bribe local politicians, for instance. But that involvement is mostly linked to encouraging other countries to be friendly to China. It does not involving bombing countries to achieve regime change.
Another fear is that a Chinese hegemon would promote the illiberal model wherever possible. I doubt that will occur. They often have friendly relations with illiberal regimes, but not because they are illiberal. Rather, those regimes will often support China in the UN, against Western countries that wish to use sanctions to promote human rights.
In fact, I suspect that China wishes that North Korea had a domestic political model more like that of South Korea, as long as the North continued to be an ally of China. South Korea is a very valuable trading and investment partner for China, while North Korea is not. China understands that highly illiberal regimes tend to be quite poor, and that its export juggernaut makes much more money selling to liberal places like Germany than illiberal places like Tajikistan.
China wants other countries to have friendly relations with China. Period, end of story. That have no interest in promoting illiberal policies in the rest of the world.
I’d even go further. Not only do the Chinese not care very much about the domestic policies of other countries, they actually find it hard to believe that other countries do care. They believe that there is a hidden agenda when the West claims to care about human rights. In that respect, China’s view is similar to that of left wing intellectuals who claim that whenever the US is ostensibly promoting human rights, there is always a hidden agenda to either increase our military dominance or help our multinational corporations. I’m not defending that cynicism (I don’t entirely agree), just describing it.
To conclude, while I believe that many current “threats” will later be seen as being exaggerated (especially Iran), I see China as the threat most likely to eventually seem to be greatly exaggerated. It’s the 1950s Soviet threat (military, technological, ideological) and the 1980s Japanese threat (jobs, technological) all wrapped up in a single country. That’s really scary to a lot of people. But on closer inspection it’s actually much less scary than it seems.
Of course that’s not to say that the fears are entirely groundless; just recently China arrested two Canadians, in apparent retaliation for the arrest of a top Huawei executive. One can find numerous other examples. Rather the argument is that the scale of concern about China is out of proportion to the actual threat.
PS. Pierre Lemieux has a post providing some more reasons not to worry about the rise of China.
PPS. I understand that China cares about what other countries think of Taiwan and Tibet. I’m not saying they don’t care at all about foreign countries, or that they don’t engage in activities such as spying. My point is that they don’t care very much about the type of regime that other countries choose to have. That’s very different from the Soviet Union during the Cold War.
PPPS. Al Qaeda is another threat we overreacted to (after 9/11, we underreacted before 9/11). Another example is marijuana. Another example is immigration. Another is the threat of children being kidnapped. Another is second hand smoke. Another is “Baby, It’s Cold Outside”. There are many more examples. Feel free to add them to the comment section.
Overreaction to perceived risks is itself one of the greatest threats to our liberty.
Underreaction to threats? How about nuclear war, bioterrorism, AI run amok, solar flares. I’m tempted to add global warming, with the caveat that many people overstate the threat.
READER COMMENTS
Mark
Dec 23 2018 at 6:59pm
I would add that China’s rise will likely be very good for other developing countries. China was a very poor country not so long ago and still sees itself as a champion of developing countries. I recently saw the Chinese propaganda movie Wolf Warrior II, and the contrast between how Africans are portrayed in that movie versus how Middle Easterners were portrayed in American Sniper or Zero Dark Thirty is striking. That movie has scenes where Chinese people who argue for rescuing Chinese before Africans are portrayed as cowards, and the Chinese army will not intervene until authorized by the UN. If it were made in the US featuring Americans in the place of Chinese, the America First crowd would be savaging it as lefty Hollywood propaganda. Chinese elites see themselves as lifting up other poor countries, while many Americans just see poor countries as refugee-laden s-holes to be walled off.
Tangibly, this means China has invested a lot of money in other developing countries. For example, extensive Chinese investment in Ethiopia has helped that country achieve consistent double digit growth, which it has never done before. Many Chinese low-end manufacturing jobs are going to Ethiopia yet you do not hear the Chinese complain about it like many Americans do; instead they accept it as passing the torch of development. By contrast, most US foreign “aid” is designed to align countries with US foreign policy and not develop them (for example, half of said aid goes to the Israeli and Egyptian militaries). I know the US has announced some more development initiatives recently, but these initiatives would also never have happened without China because our motivation for them is to counter China.
If China continues to grow and overtakes US GDP, I predict the world will have a much more level distribution of wealth with fewer of the problems originating in developing countries like extreme poverty, refugee crises, etc. we see today. I further predict that all of China’s neighbors that are currently democracies will still be democracies, and likewise the US will still be a democracy, and as rich and decadent as ever. Our reaction today will have proven to be an overreaction, but the permahawks will still insist that a global Chinese-led 1984 is right around the corner.
Weir
Dec 24 2018 at 12:31am
The tagline for Wolf Warrior II: “Anyone who offends China will be killed no matter how far the target is.”
Xi Jinping’s own line is modest and reassuring, by comparison: “Party, government, military, civilian and academic, east, west, south, north and center, the Party leads everything.”
Floccina
Dec 27 2018 at 3:25pm
And likely good for consumers in developing countries because of pushing down prices for manufactured goods.
Jon Murphy
Dec 23 2018 at 6:59pm
Regarding #3:
Even assuming that #3 is a legitimate concern, I suspect protectionism is not the way to go. I heard on a podcast (I think it was Liberty Law Talk but not sure) and from other sources that smaller countries in Asia are concerned about the US’ trade policy and withdrawal from the Pacific. They see the protectionism as the US withdrawing from the region and thus offering them fewer opportunities to grow and for protection. Thus, they are turning to the next closest major economy: China.
In short, even if we’re concerned about Chinese hegemony and military adventurism in their region, trade protections are not likely a way to solve that; they may be making the situation worse.
Scott Sumner
Dec 23 2018 at 7:43pm
Mark and Jon, Good points.
Todd Kreider
Dec 23 2018 at 7:57pm
There is nothing to this statement. China isn’t “leading” in 5G. Where are the numbers showing this? With respect o high speed rail, the U.S decided a long time ago that the airplane was going to be far more important than trains so the Chinese are somehow beating the U.S. in a technology that it isn’t interested in. The media like to report how China is “winning” against the U.S. in solar – another meaningless statement. In both countries, solar accounts for less than 1% of its primary energy. (0.7% in 2016 for the U.S. so closing in on 1% next year.)
Benjamin Cole
Dec 23 2018 at 8:12pm
I wonder why US-based libertarians, so acutely sensitive to government excesses or even minor trespasses, go mute on the topic of the Communist Party of China.
In days of yore, there would’ve been commentary such as, “There are 1.4 billion people living under the yoke of communism.”
What happened to the yoke?
The Communist Party of China has joined with (properly) amoral Western multinationals to build a manufacturing platform.
Scott Sumner may be right that this manufacturing platform does not pose a threat to Western nations, despite aggressive IP theft by the expansive China state apparatus.
On the other hand, the Harvard Business Review is publishing articles advising multinationals to diversify out of China, as they could easily become hostage to Communist Party of China pressure. Look for the Paul Maidment article in HBR. The CPC is daily expanding its involvement in commercial enterprise in China.
Westerners may also wish to be aware that multinationals will act as mouthpieces for the Communist Party of China, now their most important economic ally. And multinationals can pour unlimited funds into academia, think tanks, foundations, media, trade associations, lobby groups, and even political campaigns.
China does not need to seek influence in Washington or among the chattering classes, the multinationals do the heavy lifting.
And remember, when free-trade becomes sacralized, it becomes free-trade theology.
Mark
Dec 24 2018 at 10:01am
For me, it is very simple. Chinese people are already oppressed by their own government so we should not oppress them further.
Unfortunately, many people have a hard time distinguishing between people and their government. Thus, they use the transgressions of the Communist Party as a reason to put limits on the freedom of all Chinese people to travel and engage in economic relations.
I want to maximize freedom for all people, including the Chinese. The current hawkish line on China clearly decreases the freedom of the Chinese (and Americans who want to trade with them). Therefore, I oppose it.
E. Harding
Dec 23 2018 at 8:37pm
“What if, like the US and Russia, China believed it were appropriate for great powers to overthrow governments that it did not like? ”
Russia has never in its post-independence history believed it appropriate for great powers to overthrow governments that they did not like. That’s why it didn’t overthrow the Georgian government in 2008 or the Ukrainian government in 2014.
I think the Russian and Iranian threats have been by far the most overstated, the Turkish threat by far the least. The Chinese threat has been slightly understated, if anything, due to China continuing to rise as a major world power. The North Korean threat is overstated. For the most part, America is lucky to live in a world with very few genuine threats.
The past is a very poor guide to future Chinese behavior re: imperialism. Especially because the world is much more interconnected and other countries much more economically dependent on China than they were ever before.
“China wants other countries to have friendly relations with China. Period, end of story. That have no interest in promoting illiberal policies in the rest of the world.”
Same for Russia, especially under Putin.
“In fact, I suspect that China wishes that North Korea had a domestic political model more like that of South Korea, as long as the North continued to be an ally of China.”
I really doubt this. A richer North Korea is inherently less amenable to Chinese influence.
Overall, I think growing Chinese power will, on net, be a good thing for the world, as it seems to be more benign by nature than Western imperialism. But that is a fairly low bar to clear.
Market Fiscalist
Dec 23 2018 at 9:58pm
How can one tell the difference between an overreaction and an appropriate reaction that worked ?
Scott Sumner
Dec 23 2018 at 10:25pm
Todd, I had read several articles claiming they were ahead in 5G, but perhaps they were inaccurate.
Harding, Didn’t Russia attack Ukraine, and annex part of its territory?
Market, That can be difficult, but I believe the three examples I provide are pretty clear.
ChrisA
Dec 24 2018 at 12:10am
I hate it when people talk about winning or losing in terms of countries. This approach is all about encouraging mindless support for people in positions of power, not about development of human welfare. No-one in Switzerland for instance cares about whether they are winning or losing vs other countries in the world because they don’t have a strong central government. But they do just fine. The US contains lots of very competitive people, this is fine when you are playing sport but it is better to focus on win-win in all other endeavors in life.
Todd Kreider
Dec 24 2018 at 3:44am
Right. You would have thought the 80s with the Soviet Union and Japan would have gotten that out of our systems for good. Apparently, not quite yet.
E. Harding
Dec 24 2018 at 12:18am
“Didn’t Russia attack Ukraine, and annex part of its territory?”
I guess you could say that, but Poroshenko’s still very much president, despite his 15% approval rating. Territorial disputes are not equivalent to regime change.
BC
Dec 24 2018 at 2:51am
“China’s dominant ideology is, ‘don’t interfere in the internal affairs of other countries.'”
The problem is that China declares any areas that it is interested in as part of its territory and insists that the status of those areas is purely an internal matter.
“Didn’t Russia attack Ukraine, and annex part of its territory?”
Case in point, if the Russians followed Chinese “isolationism”, they would have declared all previous treaties and agreements regarding Crimea as “unfair” and therefore invalid. Then, they would have claimed that Crimea was already an inseparable part of Russia and a matter of fundamental importance to Russian sovereignty.
Todd Kreider
Dec 24 2018 at 4:53am
Scott, I still don’t think it makes sense to talk about China or the U.S. as in the lead with respect to 5G but here is a recent article on the supposed race. Toward the end:
Is the US being left behind?
It depends how you define the 5G race. If you count the launch of commercial service in any form, the US is in front of China. Verizon started selling its own 5G service, which is essentially a wireless version of wired broadband for homes and offices, in four US cities in October. AT&T plans to introduce mobile 5G service in 12 US cities before the end of the year. T-Mobile and Sprint say they will turn on their 5G networks by mid-2019. Chinese operators don’t plan to start selling 5G service until 2020.
However, if you think a country needs to roll out 5G to all its major cities in order to claim leadership, China looks likely to come out ahead. China Tower, a company that builds infrastructure for the country’s mobile operators, has said it can cover China with 5G within three years of the government’s allocation of spectrum. That points to national coverage by 2023.
https://www.technologyreview.com/s/612617/china-is-racing-ahead-in-5g-heres-what-it-means/
Norman
Dec 24 2018 at 9:31am
I suspect fear of China specifically is not based on any of these grounds, which are rational (even if wrong) in that they presume we are interested in our absolute well-being. As I understand the psych literature, there is substantial support for the view that we are primarily concerned about relative status compared to individuals in our circle, and I suspect this is being transferred to the global stage. That is, perhaps people are mostly concerned that China will surpass the US in economic power, which is viewed as a negative even if it makes the US richer at the same time. This might explain the support for policies that hurt the US at the same time as they hurt China; on that view, such a policy would count as a ‘win’ if it hurts China more than the US. More conservatively, it could explain a disproportionate reaction to an actual threat. This is not to say that I don’t think overreaction happens – I agree that it does (though I don’t buy all of your examples) – but rather than the response and / or mechanism might be different for threats that are potentially overall status rivals.
Quite Likely
Dec 24 2018 at 9:32am
Really the issue with China seems to be mainly about the fallacy of other countries ever really being “threats” to the United States at all. China is a rising power and will very likely surpass the United States in terms of first economic and then other types of power in the next century. It’s just that there won’t really be any negative results for Americans. It’s like a European country looking at the US in the early 1800s and saying “after a while they are going to be a stronger country than we are.” They are right, but it’s not really anything they needed to worry about.
Scott Sumner
Dec 24 2018 at 12:15pm
BC, Unlike with Crimea, no one lives on the islands in the South China Sea claimed by China.
Kurt Schuler
Dec 24 2018 at 1:53pm
Correct, but the underlying point is that a country whose policy is not to interfere in the internal affairs of other countries would not seize their territory, uninhabited or not, and build military bases on it. China has also seized territory from India, has undertaken provocative action in the Senkaku Islands, and of course frequently threatens the independent and thickly populated nation of Taiwan. If you have followed the news, you will also be aware of Chinese attempts to influence the internal affairs of Australia and New Zealand. Your characterization of Chinese foreign policy therefore appears naive at best.
John Alcorn
Dec 24 2018 at 2:11pm
Dr. Sumner,
To your list I would add a general category: Public opinion overreacts to rare bad events/atrocities. Then politicians must “do something.” Revulsion + Innumeracy —> Bad policy.
Mark Bahner
Dec 25 2018 at 12:24pm
High-speed rail makes the most sense in densely populated countries. China has a population density of approximately 145 people per square kilometer. The U.S. population density in the continental U.S. is approximately 40 people per square kilometer.
Further, the Chinese high-speed rail system is concentrated in the eastern half of the country, where the population density is particularly high:
Map of China high-speed rail (through the miracle of the Internet)
To give an analogy exaggerated for effect, Britain’s naval technology is way ahead of Switzerland’s. 🙂
P.S. Through more miracles of Internet, and especially wonderful Wikipedia, here is a list of regions of China:
Wonderful Wikipedia’s List of Regions of China
Someone who is more dedicated than I am at present could do a graph of linear miles of high speed rail versus population density of the various regions of China. (For instance, the northwest and southwest of China have relatively few miles of high speed rail, and population densities similar to the U.S.)
Warren Platts
Dec 27 2018 at 6:14pm
According to a study ordered by the Obama administration, the amount of IP theft amounts to 1% to 3% of US GDP. That is $200 to $600 billion per year. I call that a huge problem, and very much calls into question whether the U.S. is benefiting on net due to the China trade. I suspect that if the numbers were properly crunched, trade with China is actually slowing U.S. economic growth–we would be better off real-GDP-wise without it.
Therefore, why are we doing it, especially when the lopsided trade is simply turning China into a regional hegemon that will likely lead to war in the same way similar situations over the last 500 years led to war 75% of the time?
There is little reason to buy the idea that China’s dominant ideology is, “don’t interfere in the internal affairs of other countries,” as if their Confucian philosophy renders them immune to the realpolitik temptations that come with being a great power. China has been involved in at least 23 territorial disputes since the Communists took over. (That 1919 map is not accurate: Tibet was an independent nation state at the time, and remained so until the illegal 1950 invasion.)
As for the often repeated claim by free trade true believers that economic interdependence will eliminate the risk of war through mutual assured economic destruction, there are several reasons to doubt that theory: (1) the first wave of globalization did not prevent WW1; (2) the combatants in the American Civil War, and practically every other civil war were economically integrated; (3) countries often decide war is to their economic advantage: cf. Iraq’s attempt to sieze Kuwait’s oil fields in 1990, despite extensive trade between the two countries; (4) nationalism tends to trump economic prosperity: e.g., China says that it will never allow Taiwan to be an independent nation no matter what the economic cost is; (5) countries sometimes figure (whether correctly or not) that the economic cost of war is negligible (cf. Afghanistan, Spanish-American War).
Bottom line: we are heading into a VERY dangerous time–the risk of under-reacting is greater than over-reacting if you ask me.
derek
Jan 3 2019 at 3:38pm
Scott, you are not going to get very far telling me that the world I live in, where I don’t have to come home from restaurants (or bars, when I was younger), smelling like cigarettes is not way better than the old world where a night out meant reeking of smoke. I don’t miss it at all. Maybe the health risks were overblown a bit, but the quality of life is huge.
Dan
Jan 11 2019 at 1:42pm
I would argue that the CCP does get involved in the internal affairs of other countries – just not directly. They do fund groups in numerous countries to influence policy. I don’t know how significant this is.
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